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BMS shows the love for Nektar in potential $3.63B I-O pact

By Marie Powers, News Editor

Stressing the collaborative nature and “limited scope of exclusivity” of Nektar Therapeutics Inc.’s immuno-oncology (I-O) deal with Bristol-Myers Squibb Co. (BMS), Howard Robin, Nektar’s president and CEO, touted the “transformative” nature of the potential $3.63 billion pact covering NKTR-214. The alliance provides Nektar with $1.85 billion up front – $1 billion in cash and the remainder through an $850 million purchase of approximately 8.28 million Nektar shares (NASDAQ:NKTR) at $102.60 apiece – a 35 percent premium to yesterday’s closing price of $75.66 for the stock.

The companies will evaluate the potential of NKTR-214 with Opdivo (nivolumab) or Opdivo plus Yervoy (ipilimumab) in registration-enabling trials in more than 20 indications across nine tumor types. BMS obtained exclusive rights in the indications included in the joint development plan for a specified time period. Targeted indications include melanoma and renal cell carcinoma, in which pivotal trials of the combination approach are expected to start mid-year, along with non-small cell lung cancer, bladder and triple negative breast cancer.

Nektar, of San Francisco, is entitled to downstream milestones of $1.78 billion, including $1.43 billion in development and regulatory milestones, with the remainder linked to sales. Moreover, Nektar will book revenue for global sales of NKTR-214, recognizing a 65 percent split of global profits for NKTR-214, with BMS receiving the remaining 35 percent along with 100 percent of revenues for its own medicines.

BMS also will shoulder 67.5 percent of the development costs in the collaboration – 67.5 percent for joint NKTR-214/Opdivo development and 78 percent for trials that include NKTR-214 with Opdivo and Yervoy.

No matter how many trials are started in a given year, Nektar’s expenses in the joint program are capped at $125 million annually, Robin said.

The companies plan to move combinations involving NKTR-214 apace. Speed of the proposed development plan was at the core of discussions to shape the BMS alliance, according to Robin.

“We want to get NKTR-214 developed as broadly and rapidly as possible,” he emphasized on a call with analysts early Wednesday. “If these studies – all registrational studies – are not started within 14 months, they are not subject to exclusivity,” enabling Nektar to move forward with other checkpoint combo relationships.

The deal was struck based on promising data emerging from the ongoing phase I/II PIVOT study that has shown a compelling objective response rate and impressive disease control rate for the combination of Opdivo and NKTR-214, which binds to the CD122 receptor on the surface of CD8-positive and CD4-positive immune cells. (See BioWorld, Nov. 14, 2017.)

In the meantime, the BMS tie-up does not prevent Nektar from partnering NKTR-124 with other types of I-O assets, such as chimeric antigen receptor (CAR) T cell therapies. Nektar will continue to advance the remainder of its pipeline, including wholly owned asset NKTR-181, a mu-opioid agonist that proved its mettle last year in a phase III study in more than 600 patients with moderate to severe chronic low back pain who were new to opioid therapy. (See BioWorld Today, March 21, 2017.)

New York-based BMS agreed to certain lock-up, standstill and voting provisions on its share ownership for five years, subject to certain exceptions.

If the deal looked sweet for Nektar, Evercore ISI analyst Umer Raffat said terms were just as favorable for BMS.

“I think BMY got a very good deal structure on this I-O program,” he wrote in an email, by retaining 35 percent of the economics “and yet not bet $16 [billion] up front.” BMS also ensured its leadership in phase III I-O combination studies, Raffat pointed out.

The big pharma’s interest in the Nektar program “goes beyond just the biology,” he added, noting that BMS “was likely intrigued by the early response rate data coming out of NKTR … specifically in the PD-L1 [patients].”

Overall, “I like this addition to BMY portfolio,” Raffat concluded.